Employee Benefit Trust Minutes - 01/07/2005CITY OF WICHITYA FALLS
EMPLOYEE BENEFITS TRUST MEETIN
January 7, 2005
Present: Bill Sullivan, Chair
CITY CLERK'S OFFICE
Date
BY 1 Time
James Berzina, City Manager
Jim Dockery, Director of Finance
Jan Stricklin, Director of Administrative Services
Gail Gannon, Employee Benefits Coordinator
Paul Davidson, ICMA Retirement Corporation
Frank Bell, ICMA Retirement Corporation
This meeting was called for the purpose of discussing the new program offered by the
ICMA Retirement Corporation, the Vantage Care Retirement Health Savings Plan. It
was basically a question and answer session between the Board and the ICMA
representatives.
The ICMA Health Savings Plan is a program where employees can put aside money, tax
free, and use that money at retirement, again tax free, for medical related expenses.
Paul Davidson of the ICMA Corporation began the meeting by explaining that the
program is one where the money goes into the account tax free and is taken out, after
retirement, tax free. The accounts can be funded entirely by the participant, fully funded
by the City, or a combination of both. The money can be used only for medical related
expenses such as insurance premiums, expenses not covered by insurance, co -pays, etc.
He further explained that the money cannot be taken out in lump sums, only upon filing
of a claim by the participant and only for the amount of the claim filed. The unused
portion at the end of a calendar year is not lost as in other similar plans and can be passed
on to beneficiaries. The money, as long as it is in the account, is invested and
accumulates interests, much the same as regular ICMA retirement accounts. Once a
person commits to participation in the program, they cannot withdraw from the program
and contributions cannot be increased or decreased. He further explained that the primary
advantages to participating in the program is that the employee never pays taxes on the
money and the employer never pays FICA taxes on the money.
Jim Dockery asked if the money going into the account would affect the gross income
amount that goes into the employees Texas Municipal Retirement System account, thus
affecting the amount a participant would receive in regular retirement benefits upon
retirement. Mr. Davidson explained that it does not affect the TMRS accounts.
Mr. Berzina asked if the money could be used for medical expenses while the participant
was still employed. Mr. Davidson explained that the money can only be used upon
separation of employment or retirement.
Jan Stricklin asked if there was a minimum number of employees who must participate in
order for the City to adopt the program. Mr. Bell of ICMA explained that there is no
minimum participation requirement.
Jan Stricklin asked if payroll deduction was the only way for the money to be contributed
to the account and if employees could contribute their lump sum vacation and sick leave
benefits at the end of their employment. Mr. Davidson said that the money must be
payroll deducted and that yes, participants can elect to have a per paycheck participation
and/or commit to a future contribution of a lump sum at the end of employment.
Mr. Davidson informed the Board that even though employee participants cannot change
their contribution level, the City, if electing to fund a part of the program, can amend the
employer contribution level.
Jim Dockery asked for clarification as to how a participant receives payments from the
program for expenses incurred. Mr. Davidson explained that the employee, upon
separation, has a pool of money in his/her account. They must file a claim and provide
receipts for expenses. They should receive payment for those receipts within 30 days.
He further stated that on going expenses, such as premiums, can be a direct payment
monthly to the vendor from the account.
Mr. Dockery gave a brief talk on the advantages of the City funding a portion of the
contributions to each employee account. The City could save a considerable amount of
money each year in FICA taxes. He stated that the City portion of the contributions could
be made at the end of each year and only to those accounts where the employees were
still actively at work.
Bill Sullivan asked about the cost to the employee and employer for administration of the
account. Mr. Davidson said that there is no fee to the employer but that each employee
participant has a $30.00 per year fee deducted from the account.
Mr. Davidson suggested that the City could choose to open the program initially to
certain groups of employees such as fire and police. Jan Stricklin said that, should the
City choose to adopt the program, it should be available to all employees. The Board
agreed.
Bill Sullivan noted that there are several things for the Board to consider:
1. Funding
a. employee, employer, or a combination
b. mandatory or voluntary
c. allowing employees to contribute a portion of their sick time money at
the end of employment
Frank Bell again stressed that this is an excellent way for retirees to fund their after
retirement medical expenses with tax free money.
Mr. Berzina suggested that ICMA send the necessary forms for the City to initiate the
program and that it could then go before the Council for approval.
Frank Bell will send the forms. Mr. Davidson said that he would also get some feedback
from other cities as to how the program has been received by their employees.
The Board will meet again after receiving the forms from ICMA.
Respectfully submitted,
Gail Garmon
Employee Benefits Coordinator